Study: Nearly half of LA’s short-term rentals may be illegal

Nearly half the house-share listings in Los Angeles may be illegal.

That’s the conclusion of a new study that found city enforcement of a three-year-old law aimed at regulating short-term rentals on platforms such as Airbnb has been weak, while scofflaws have become more common, LAist reported.

Nearly half of recent listings on Airbnb and Vrbo appeared to be out of compliance with the city’s ordinance, according to the study by McGill University urban planning Professor David Wachsmuth.

McGill University’s David Wachsmuth

“Los Angeles is one of a number of cities that has short-term rental rules which, on paper, look very good,” Wachsmuth said. “But what I find in practice when I dig into the data is that L.A.’s rules are not being enforced effectively.”

The study found that an estimated 45 percent of recent listings on Airbnb and Vrbo were likely violating L.A.’s home sharing law.
It concluded the city could have collected up to about $300 million in fines last year due to violations – but levied less than $40,000 in fines.

At the same time, ithe study found short-term rentals have taken 2,500 homes off the market for long-term residents.

In response to the report, L.A. City Council member Bob Blumenfield introduced a motion on Friday asking various city departments to investigate the study’s findings and report back on enforcement plans moving forward.

“The laws are clear and the city must do more to ensure that those who are purposely evading rules are held accountable,” said Blumenfield in an emailed statement to the website affiliated with public radio station KPCC/89.3FM.

Airbnb and Vrbo representatives denied their platforms enable widespread flouting of L.A.’s home sharing law, while one questioned the funding source for the study.

“We’re proud of the tools we’ve built in partnership with the city of Los Angeles to help officials enforce local rules,” Sam Randall, spokesman for Airbnb, told LAist in a statement.

The city’s Planning Department, tasked with enforcing home-sharing regulations, did not respond to questions about the study.

But a department spokesperson said the number of short-term listings in L.A. has been in steep decline since the city began enforcing the law in late 2019. The person noted listings across all hosting platforms in L.A. fell by 78 percent, from 36,600 listings in November 2019 to 8,000 as of November 24.

Wachsmuth’s study also noted the decline. But he largely attributed it to the global tourism slump brought on by the COVID-19 pandemic, not regulatory changes by the city.

In order to do business legally in L.A., short-term rental operators must register with the city and display their registration number in online listings.

The study compared Airbnb and Vrbo listings against a database of valid registration numbers provided by the city. It found many listings were posting invalid or expired registration numbers.

Other listings had valid registration numbers, but were still likely breaking the rules, according to the study. Some listings appeared to be booked more than 120 days per year, even though they lacked a permit required by the city for “extended” home sharing.

In total, the study estimates that 45 percent of listings posted in August were likely breaking L.A.’s home sharing law.

“More and more hosts are realizing, ‘You know what, you can just get away with this,’” Wachsmuth said.

The study was commissioned and funded by Better Neighbors L.A., a coalition that seeks to curb illegal short-term rentals. The group includes a labor union representing local hotel workers. Wachsmuth said the group had no influence on the study’s conclusions.

Edward Kung, an economics professor at California State University — Northridge, who has conducted his own research on short-term rentals, said the study’s conclusion “that Airbnb reduces rental stock and raises rents is certainly consistent with previous academic findings.”

— Dana Bartholomew

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